Friday, August 10, 2012

Raising Taxes To Send More Money To Washington So Politicians Can Spend It Is Best Way To Get This Economy Growing

Recent conversations on Twitter have convinced me many Progressives are deliberately short-circuiting their thinking on how we're ever going to get the economy growing again and put America back to work. Progressives have a deep and abiding belief in the THEORY that it's Washington that drives the economy, that the politicians up there DOING THINGS with the tax money sent up there is what causes this country to 'go'. They honestly believe this country's prosperity originates with politicians in Washington. And nothing could be further from the truth.

"Well of course us political elites here in Washington are better at creating jobs than businessmen

in the private sector. What? No, I've never worked in the private sector.....

wait why are you all looking at me like that?"

For 3 1/2 years we've watched Obama & Co. try to promote 'job creation' and 'kick-start the economy' by spending vast amounts of money taken from the private sector. Over $1 trillion at last count. $820 billion in new spending in one stimulus bill alone. It's like a natural law on the left: sending more money to Washington is ALWAYS the answer to a better economy; leaving more money in the private sector is NEVER the answer. The greedy rich bastards will just SIT on the money, so Washington HAS to take it so something good can be done with it. They only trust wealth when it's under the control of the political elite class in Washington. In private hands they actually view it as a net negative.Liberal Talking Point #2:Cutting Tax Rates DOES NOT Lead To Gov't Collecting MORE Tax Revenue During Resulting Economic BoomThe problem with this kind of thinking is that actual experience doesn't bear it out. The wealthy do NOT sit on their money when you cut the tax rates. Here's just 3 examples where tax rate cuts lead to economic booms that also led to the Gov't collecting MORE in taxes than they were at the higher rates, courtesy of Peter Ferrara at The American Spectator:http://spectator.org/archives/2012/08/08/romneys-tax-plan-is-a-winner/print

Kennedy:

These tax policies enjoy a history of bipartisan success. JFK proposed legislation to reduce income tax rates across the board by 30 percent, explaining.

It is a paradoxical truth that tax rates are too high today, and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the tax rates….[A]n economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs or enough profits.

Kennedy's proposed tax cuts were adopted in 1964, and pulled the top rate from 91 percent down to 70 percent, while reducing the lower rates. The next year, economic growth soared by 50 percent, and income tax revenues increased by 41 percent! By 1966, unemployment had fallen to its lowest peacetime level in almost 40 years. U.S. News and World Report exclaimed: "The unusual budget spectacle of sharply rising revenues following the biggest tax cut in history is beginning to astonish even those who pushed hardest for tax cuts in the first place." Arthur Okun, the administration's chief economic advisor, estimated that the tax cuts expanded the economy in just two years by 10 percent above where it would have been.

Reagan

Reagan and succeeding Republicans abolished federal income taxes on the working poor and on what the Left calls the working class, and they almost abolished them on the middle class.

It began with the Earned Income Tax Credit (EITC), which grew out of then-Governor Ronald Reagan's famous testimony before the Senate Finance Committee in 1972. Reagan proposed exempting the working poor from all Social Security and income taxes as an alternative to welfare, with the credit serving as a way to offset payroll taxes for low-income workers. As president, Reagan cut federal income tax rates across the board by 25 percent. He also indexed the tax brackets to prevent inflation from pushing working people into higher rates.

In the Tax Reform Act of 1986, President Reagan reduced the federal income tax rate for middle- and low-income families all the way down to 15 percent. That law also doubled the personal exemption, shielding a higher proportion of income from taxation for lower income workers than for higher income workers.

After the Reagan tax cuts were fully implemented, the economy took off on a 25-year economic boom (from 1982 to 2007). It was interrupted by two short, shallow recessions, but it is widely recognized in the economic literature, and by the National Bureau of Economic Research, as one long boom. During the first seven years alone, the economy grew by almost one-third, or the equivalent of adding an entire West Germany, the third largest economy in the world at the time, to the U.S.

Newt Gingrich's "Contract with America" adopted a child tax credit of $500 that also reduced tax liabilities for low-income people more than high earners. President Bush doubled that credit to $1,000 per child, and made it refundable so that low-income people can get the full credit even if they do not pay $1,000 in federal income taxes. Bush also adopted a new 10-percent tax bracket for the lowest income workers, which reduced their federal income tax rate by one-third.

This is how we reached the point at which, by 2007, after 25 years of Reaganomics and before President Obama was even elected, the bottom 40 percent of earners, on net and as a group, paid less than 0 percent of federal income taxes, according to official IRS data, as reported recently by the Congressional Budget Office. Instead of paying at least some income taxes to help support the federal government, the federal government paid them cash through the income tax code. That same year, the middle 20 percent, the true middle class, paid less than 5 percent of all federal income taxes.

George W. Bush

The Bush tax cuts quickly ended the 2001 recession, despite the contractionary economic impacts of 9/11, and the economy continued to grow for another 73 months. In the four years after the rate cuts were fully implemented, the economy created 7.8 million new jobs, and the unemployment rate fell from over 6 percent to 4.4 percent. Real economic growth over the next three years doubled from the average for the prior three years, to 3.5 percent.

Business investment, which had declined for nine straight quarters, reversed and increased 6.7 percent per quarter. That is where the jobs came from. Manufacturing output soared to its highest level in 20 years. The stock market revived, creating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 almost doubled. Capital gains tax revenues doubled by 2005, despite Bush's 25 percent rate cut!

Cut the tax rates, collect double the revenue you were getting at the higher rate - just 3 years later. Imagine that. And yet even after you spell this out, many progressives just dismiss the evidence out of hand. They don't need to even take a real look at it; it doesn't FIT their worldview, so of course there is no reason to look at it - it can't possibly be true, so why bother?

The Progressive can sit there and keep sputtering "Does....NOT...compute!" but that doesn't do a thing to change the history or the facts. If you want to twist a Progressive into mental knots: after getting them to strongly deny that the Kennedy, Reagan & Bush tax rate cuts had ANYTHING to do with the economic booms that followed, with low unemployment and the increasing tax revenue collected, ask them to explain what the REAL cause was. What was it that caused these big economic boom times of sustained growth, anyway? Do they know?THEY INVARIABLY TRY TO CLAIM THESE ECONOMIC BOOMS AND PERIODS OF SUSTAINED GROWTH WERE CAUSED BY TAX INCREASES AND GOV'T SPENDING. In other words - political elites in Washington 'doing stuff'. Washington HAS to play a direct role in this. There's just no other way. They won't even seriously consider any thought that the cause lies outside of Washington political elites spending money somewhere. So they have no clear idea what it really was that caused those economic booms....but BY GOD THEY DO 'KNOW' WHAT DIDN'T CAUSE IT! And they will never give an inch on that point. Ever. Liberal Talking Point #3: Because Republicans Won't Agree To Immediate Tax Increases In Exchange For Future Spending Cuts, They Don't Care About Deficit

Right now Democrats are trying the same old trick of trying to get Republicans to agree to immediate tax increases in exchange for the promise of future spending cuts. So of course Progressives on Twitter are demanding to know when Republicans will give in and agree to immediate tax hikes in exchange for future spending cuts. Ann Coulter already reminded everyone yet again why you can NEVER trust Democrats who are trying the same old 'Lucy With The Football' trick of offering a trade of immediate tax increases today in exchange for spending cuts tomorrow:
http://www.humanevents.com/2011/11/23/ill-gladly-pay-you-tuesday-for-a-tax-increase-today/

Reneging on Reagan:

At Tuesday night’s Republican presidential debate on foreign policy, for example, CNN’s Wolf Blitzer asked the candidates for the one-millionth time if they would agree to raise taxes in exchange for spending cuts 10 times larger than the tax hikes.

Terrorism can wait — first, let me try to back you into a corner on raising taxes.

Amazingly, Blitzer cited Ronald Reagan’s statement in his autobiography, “An American Life,” that he would happily compromise with Democrats if he could get 75 or 80 percent of what he wanted — implying that today’s Republicans were nuttier than Reagan if they’d refuse a dollar in tax hikes for $10 in spending cuts.

Wolf should have kept reading. As Reagan explains a little farther in his autobiography: He did accept tax hikes “in return for (the Democrats’) agreement to cut spending by $280 billion,” but, Reagan continues, “the Democrats reneged on their pledge and we never got those cuts.”

For Americans who are unaware of the Democrats’ history of repeatedly reneging on their promises to cut spending in return for tax hikes, the Republicans’ opposition to tax increases does seem crazy. That’s why Republicans need to remind them.

From the moment President Reagan succeeded in pushing through his historic tax cuts in 1981 — which passed by a vote of 323-107 in the House and 89-11 in the Senate, despite Democrats’ subsequent caterwauling — he came under fantastic pressure to raise taxes from the media and the Democrats.

You will notice it is the same culprits pushing for tax hikes today.

So in 1982, Reagan struck a deal with the Democrats to raise some business and excise taxes — though not income taxes — in exchange for $280 billion in spending cuts over the next six years. As Reagan wrote in his diary at the time: “The tax increase is the price we have to pay to get the budget cuts.”

But, of course, the Democrats were lying. Instead of cutting $280 billion, they spent an additional $450 billion — only $140 billion of which went to the Reagan defense buildup that ended the Evil Empire.

Meanwhile, Reagan’s tax cuts brought in an extra $375 billion in government revenue in the next six years — as that amiable, simple-minded dunce Reagan always said they would. His tax cuts funded the entire $140 billion defense buildup, with $235 billion left over.

Reneging on George H.W. Bush:

Unable to learn from the first kick of a mule, President George H.W. Bush made the exact same deal with Democrats just a few years later.

Pretending to care about the deficit — created exclusively by their own profligate spending — Democrats demanded that Bush agree to a “balanced budget” package with both spending cuts and tax increases.

In June 1990, Bush did so, agreeing to tax hikes in defiance of his “read-my-lips, no-new-taxes” campaign pledge.

Again, Democrats, being Democrats, produced no spending cuts, and within two years the increased federal spending had led to a doubling of the deficit.

So yes, let's hope Republicans fall for a third attempt to kick that football, shall we? No, this time Dems will actually have to do the spending cuts and after we actually CUT THE TAX RATES to get the economy moving again, we'll talk about what taxes to raise a few years down the road.Liberal Talking Point #4: Tax Cuts Must 'Pay For Themselves'; Bush's Didn't So It's Long Past Time For Them To EndAlso prevalent on Twitter right now is the rhetorical trick of claiming that tax rate cuts lead to 'lost revenue' and so they need to 'pay for' themselves. In fact, even if you bought into this rhetorical confusion of tax cuts having to 'pay for themselves', the economic booms that followed the Kennedy, Reagan & Bush tax cuts would have indeed 'paid for' those rate cuts.

George W. Bush and his congressional allies pushed through tax cuts in 2001 and 2003 that, according to the Congressional Budget Office, added more than $2 trillion to the deficit over 10 years.

Beinart must not have noticed the federal revenues climbing from 2003-2007 after the economy expanded and grew after the taxcuts took effect:

As anyone who remembers what happened to the economy in late 2001 through 2002, the economy took a $2 trillion hit from the 9-11 attacks,not the Bush tax cuts. Beinart has simply quoted the OMB on how much tax revenue was lost during this period and laid it solely at the feet of the Bush tax cuts. He tries to palm off that big dip in federal tax revenues you see in that chart above, from 2001-2003 as being a direct result of Bush lowering the tax rates, completely flushing 9-11 and it's economic impact right down the memory-hole. Not to mention he's also peddling the fallacy that lowering tax rates has to be 'paid for'. The tax cuts actually HELPED THE ECONOMY REBOUND from the 9-11 hit. Revenues hit a peak of over $2.7 trillion in 2008 before plunging because of the recession. But don't wait for Peter Beinart to point this out to you. He'll try to sell you the idea that the economic boom from 2003-2007 happened IN SPITE of the Bush tax cuts, but he gets hazy if you try to press him as to what the actual cause of that boom was. Liberal Talking Point #5: It's The Gov't's Most Important Job To 'Fix' The 'Problem' of 'Income Inequality' In This CountryAnother prevalent trend on Twitter with Progressives is the constant caterwauling over 'income inequality' and how Washington isn't doing enough to address this 'problem'. It needs to be remembered at all times: for Progressives raising taxes is never about generating more revenue for the Government; it's about FAIRNESS and the Gov't exercising it's supposed role in 'fixing' the 'problem' of 'income inequality' by engaging in wealth redistribution. Let me remind everyone in case they forgot or they've been brainwashed: it's not the Government's job to 'fix' 'income inequality' through wealth redistribution through taxation or ANYTHING ELSE. If you really think it is, please cite the section in the Constitution that spells out the role of the Federal Government in this. This is a sophistry, an invention and it's far past time it was laid to rest. It's not the Governments job to force or cause economic equality between citizens. You do not have a 'right' to equal financial outcome with anybody else. Anyone who told you did was either ignorant or lying to you.

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A Conservative since 1986, I was moved to launch my blogging career on the death of Andrew Breitbart in March 2012. I have been on the internet since 1994, studying Liberal pathology and making PC internet bullies scream in frustration.

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